By IAN ROSS
A Thunder Bay group pursuing the acquisition of a mothballed Cascades mill has found a new source of financing.
Andre Nicol, spokesman for the Thunder Bay Fine Papers group, feels confident the mill could still be operational this summer with ambitious plans to produce 200,000 tonnes of coated paper annually.
His group had to search for alternatives after a previous Canadian investors group passed on the deal with Thunder Bay Fine Papers.
Nicol says his group was “extremely disappointed” after a pending deal with an earlier investor groups fell through at the end of January after many months despite a letter of intent being signed. “They were leading us astray a little bit.”
The group is now seeking to complete the transaction with Cascades Inc. by arranging financing for $25 million for mill capital upgrades and operating funds through Ernst & Young Orenda Corporate Finance Inc.
Nicol said in mid-April his group was hopeful of finalizing a deal within weeks and being handed the keys by Cascades, which has signed a letter of intent to sell.
“I feel better than I did in February because then were getting the run-around.”
The Thunder Bay group is headed by Dennis Bunnell who served as the last president of Provincial Papers, an employee-run predecessor company prior to the mill’s acquisition by Quebec-based Cascades in 1997. Partner John Hitchman is also a former mill manager. Nicol would serve as vice-president of sales.
Nicol was part of a group formed in the fall of 2005 when Cascades announced it would closed the mill.
The Quebec company blamed high energy costs, a strong Canadian dollar and unfavourable market conditions for the closure.
Nicol says because of a duty imposed by the U.S. government on coated paper imported from the Far East, the market for Canadian-made paper has the greatest potential for growth, according to their consultant’s report.
When operational, the mill would employ 340 people and more indirect employment in woodlands and transportation.
Once a negotiated deal with Cascades is complete, the operation would be eligible for a slew of provincial dollars.
Natural Resources Minister David Ramsay pledged funding would be available through a $350 million loan guarantee, a $150 million grant program and a $140-million Electricity Assistance Program.
The local group intends to build a co-generation plant with a wood waste feed.
